ANZ's delayed rate cuts worth more than $100m

ANZ has become the last of the big four banks to pass on part of the Reserve Bank’s rate cut, netting a lot of money through its delayed decision.

The bank will reduce its standard variable rate by 0.20 percentage points to 6.4 per cent, effective December 21.

ANZ has stuck with a tradition, unveiled in December last year, of not revealing its decision until the second Friday of each month.

"This month we assessed a wide range of factors in reaching our decision including the impact of the lower cash rate on domestic funding sources, continuing competition for deposits, the international funding environment and our competitive position," ANZ's chief executive Philip Chronican said.

"We believe the decision to lower our variable mortgage rate by 0.20 per cent per annum is the right one for our customers providing a competitive mortgage rate while also recognising the significant uncertainty associated with the fiscal situation in the United States and the political situation in Europe."

ANZ said its next interest rate review would be on February 8.

The move has helped the bank net a greater amount through saved interest income than its rivals. For 2012, ANZ is estimated to have generated about $111 million in additional revenues as it delayed passing on rate cuts following the RBA's four reductions.

According to JPMorgan analyst Scott Manning in a report published in BusinessDay on Monday, each of the major banks ‘‘makes somewhere in the order of $2 million each day that it does not pass on the rate cut’’.

For this month, the bank was estimated to net about $25 million in interest income in passing on the rate cut 17 days after the RBA announcement.

At the same time, Westpac was set to generate $28 million in interest income over the 13 days it takes to pass on the December rate cut. Commonwealth Bank generated $14 million, while NAB generated $11 million, Mr Manning had estimated.

ANZ has cut its standard variable rate by 140 basis points since November 2011, while the Reserve Bank has lowered the cash rate by 175 points.

The other big three banks - Commonwealth Bank, National Australia Bank and Westpac - announced a cut of 0.20 percentage points on December 5, one day after the RBA dropped the official cash rate by 25 basis points.

Westpac’s new standard variable rate will take effect on Monday. CBA and NBA’s reductions took effect on four days ago.

Standard variable rates

ANZ 6.40 per cent*Commonwealth 6.40 per centNAB 6.38 per centWestpac 6.51 per cent*Westpac’s current rate is at 6.71 per cent. Its reduced rate will be effective from December 17. ANZ's current rate is 6.6 per cent. Its reduced rate will be effective on December 21.

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